Recurring deposits are a form of savings account that allows investors to make regular instalments for sustaining future funding. Investors who would rather make regular deposits into their account than one large payment tend to favor recurring deposit accounts. For a predetermined amount of time, one makes deposits into a recurring deposit account, earning interest on their investments.
The investor receives the interest earned on their investment when their recurring deposit account matures. Recurring deposits are extremely stable, which makes them a particularly safe alternative for investing. A recurring deposit calculator makes it simpler to determine the anticipated returns and premiums for your account.
Before you invest in recurring deposits, it is essential to understand how and why a recurring deposit calculator can prove to be advantageous for investors. Let’s have a look at them-
Benefits of Using a Recurring Deposit Calculator
Recurring deposit, as a tool of disciplined investment, offers various benefits to investors. It requires routine deposits and pays the assured sum and returns generated on the recurring deposits account to the beneficiary on the completion of the term. The interest rate of recurring deposits is fixed, thus avoiding loss due to fluctuation in the market.
A recurring deposit calculator helps in calculating the lump sum amount and estimated returns on your recurring deposit account. A recurring deposit calculator is developed to ease the process of calculating returns on your investments. Other advantages of a recurring deposit calculator are-
Saves Time: Calculations are not everyone’s cup of tea. Moreover, calculating returns on investments can be rather time-consuming and complicated to perform. With a recurring deposit calculator, an investor can efficiently and quickly calculate returns on their recurring deposit account without much hassle and save time. Thus, a recurring deposit calculator ends up saving a great amount of time and sweat while making investments.
Easy to Use: Computations can be complicated. However, with a recurring deposit calculator, calculating returns is easy. It is designed with a user-friendly interface to simplify the process of computation. All an investor has to do while calculating recurring deposit returns is to enter the number of monthly deposits, the interest rate and the tenure or duration of the investment.
Futuristic: The first and foremost step while making any investment commitment is to map out one’s financial future goals. With the aid of a recurring deposit calculator, an investor can have an insight into the ways to accomplish these goals through a well-planned investment strategy. Thus, a recurring deposit calculator helps in financial planning for one’s future and being prepared for any financial emergencies.
Error-free: The greatest advantage of using any online computation tool is its accuracy. With the aid of a recurring deposit calculator, the investor can avoid making any calculation mistakes. Since a recurring deposit calculator works on a mathematical formula, it provides the same result as a manually computed solution, except it has no room for errors unless the details filled are incorrect.
Free of Cost: Since a recurring deposit calculator is available online on company sites, these are usually free to use and entail a cost for using them. You can use it as many times as you wish without having to worry about any service charge for the same. Thus, a recurring deposit calculator helps in making a smart choice.
Compare and Select: There are various companies that provide recurring deposits. Each and every recurring deposit may differ in terms of its maturity value. By using a recurring deposit calculator, you can compare the various recurring deposit maturity values and select the best possible option for yourself.
Now that you have learned about the advantages of a recurring deposit calculator let us briefly look at how it works.
How Does a Recurring Deposit Calculator Work?
A recurring deposit calculator takes into consideration three major factors, namely- your monthly deposit, the tenure of a recurring deposit, and the interest rate of your recurring deposit. It works on the following formula-
A = P*(1+R/N)^(Nt)
‘A’ – maturity value
‘P’ – recurring deposits monthly deposit
‘N’ – compounding variable for interest rate
‘R’ – interest rate of recurring deposit in percentage
‘T’ – tenure of recurring deposit account
An online recurring deposit calculator uses the same formula for recurring deposit computation.
Now that you know the advantages of a recurring deposit calculator, it can be said that it is a very helpful means of planning for one’s financial future. It doesn’t require any major payment to open a recurring deposit account. An investor can start a recurring deposit account with just 10 rupees, although it varies from bank to bank.
However, investors looking to make non-risky investments for the long term can opt for recurring deposits. It will allow them to make routine instalments and generate funds for their future.